G20 seeks ‘further dialogue and actions’ on trade – Draft statement comes just days before US tariffs enter into force

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BUENOS AIRES, March 20, (RTRS): The world’s financial leaders are likely to reaffirm on Tuesday their commitment to fighting protectionism and recognize the need for “further dialogue and actions” on trade, just days before US steel and aluminum tariffs are to enter into force.

Finance ministers and central bankers of the world’s 20 biggest economies, the G20, have been meeting in Buenos Aires, discussing the risk to global economic growth posed by a potential trade war caused by the US tariffs and looming trade sanctions on China.

A draft communique seen by Reuters showed the financial leaders added a phrase that was not in their initial draft, which stresses the need for further talks on trade issues.

“International trade and investment are important engines of growth, productivity, innovation, job creation and development,” the G20 said in the latest draft communique seen by Reuters.

“We reaffirm the conclusions of our leaders on trade at the Hamburg Summit and recognize the need for further dialogue and actions. We are working to strengthen contribution of trade to our economies,” the draft said.

The new language on the need for trade dialogue comes as US President Donald Trump is readying plans to punish China with tariffs over its intellectual property practices.

Two officials briefed on the matter said Trump is expected to unveil tariffs on up to $60 billion in Chinese technology and telecoms products by Friday, the same day when a tariff of 25 percent on imported steel and 10 percent on aluminum are to apply.

A final communique is expected to be released later on Tuesday.

The Hamburg Summit communique, which was signed by Trump in July 2017, says that G20 countries would “continue to fight protectionism including all unfair trade practices.”

But it also says in the same sentence that they “recognise the role of legitimate trade defence instruments” – an ambiguity which provides the US with a way to argue its cause on the tariffs.

In the latest draft communique, the G20 ministers repeated their traditional pledges to refrain from competitive devaluations and avoid targeting their foreign exchange rates for export advantage.

But they also added some new language on exchange rates, emphasizing stability and flexibility:

“Strong fundamentals, sound policies, and a resilient international monetary system are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment. Flexible exchange rates, where feasible, can serve as a shock absorber,” the draft communique said.

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BRUSSELS: EU President Donald Tusk on Tuesday said the bloc would respond to a looming trade war with the US responsibly as he urged Europe to engage with Washington in a constructive manner.

“On this issue, we stand by the European Commission, which is currently holding talks with our American friends on how to exempt the EU from the planned steel and aluminium tariffs,” Tusk said in a letter inviting EU leaders to a summit on Thursday and Friday.

“We must prepare for all possible scenarios. As the world’s biggest trading power, the EU’s response will be responsible and reasonable,” he said.

The EU has been on tenterhooks amid fears of a global trade war since US President Donald Trump this month suddenly announced steep duties of 25 percent on steel and 10 percent on aluminium.

The European Commission, the 28-nation EU executive body, has drawn up countermeasures on flagship US products including peanut butter, orange juice and bourbon whiskey if Trump goes ahead.

Trade Commissioner Cecilia Malmstroem, the EU’s top trade official, is in Washington to meet US Commerce Secretary Wilbur Ross and other officials to unblock the issue.

Quoting French philosopher Montesquieu, Tusk insisted: “the natural effect of trade is to further peace”.

Strong transatlantic relations are paramount for Tusk, a former Polish prime minister and he urged EU leaders to keep a cool head.

“Given the importance of this relationship, we should continue to engage with the US in order to strengthen the transatlantic economic relationship, not weaken it,” Tusk said.

This, “despite seasonal turbulences,” he stressed. (AFP)

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